1040 Preparation and Planning 6: Income: Business, Farm, and Rental (2026)

Author: Barbara Weltman, Greg White

Per the IRS Education Provider Standards this course must be COMPLETED by 12/31/2028 to receive credits. NOTE: Go to My Professional Profile in your CCH CPELink account settings to ensure your name, and PTIN number; matches your PTIN card

This five-hour CPE course, the sixth in the 1040 Preparation and Planning series, covers income and expenses of sole proprietors and independent contractors on Schedule C, farm income and expenses on Schedule F, and rents and royalties on Schedule E.

Tax developments reflected in this course include the extensive changes effective for 2025 that were created by the One Big Beautiful Bill Act of 2025 (OBBB Act) other tax legislation, as well as IRS pronouncements, and court decisions. They impact 2025 tax year returns that will be filed during the 2026 filing season and refund opportunities for earlier years; as well as point the way to strategic planning in 2026 and beyond. This course brings the tax preparer "up-to-speed" in preparing 2025 tax returns for the 2026 filing season.

Publication Date: September 2025

Topics Covered

• Business Income and Expenses
• Spousal Businesses
• Business Deductions
• Reasonableness of Salaries
• What Constitutes a Business?
• Examples of Common Ordinary and Necessary Business Expenses
• Interest Expense Limitations
• Start-Up Expenses
• Advertising Expenses
• Business Bad Debts
• Loans by Shareholder-Employees
• Nonaccrual-Experience Method
• Explanation of Bad Debt Deduction on Tax Return
• Bribes and Kickbacks
• Fines and Penalties
• Lobbying Expenses
• Interest on Tax Deficiencies
• Repairs and Maintenance Costs
• Capital Expenditure
• Repair
• Capital Items
• Research and Development Expenditures
• Carrying Charges, Interest, and Taxes on Real Estate
• Travel Expenses
• Expenses of Employees
• Accountable Plans
• Considerations for "Reasonable Time"
• Types of Expenses
• Spouse or Other Travel Companion
• Investment Seminars
• Foreign Conventions
• Cruise Ships
• Temporary Jobs Away from Home
• Commuting Expenses
• Deducting Vehicle Expenses
• Standard Mileage Rate Exclusions
• Dollar Limits
• Nonpersonal Use Vehicles
• Entertainment Expenses
• Business Meals
• Exceptions to the 50% Limitation Rule
• Business Gifts
• Substantiation of Travel Expenses and Gifts
• Recording of Expenditures
• Per Diem Allowances
• Statutory Employees
• Investment Expenses
• Home Office Expenses
• Exceptions to Exclusive Use Test
• Home Office Deduction
• Direct and Indirect Expenses
• Gross Income Limit
• Educational Expenses
• Deductible Expenses
• Depreciation
• Mid-Quarter Convention
• Property Placed in Service
• Section 179 Deduction
• Taxable Income Limitation
• Recapture of Expensing
• Alternative Depreciation System (ADS)
• Amortization
• Section 197 Intangibles
• Business Start-Up Expenditures
• Depletion
• Business Losses
• Casualty and Theft Losses
• Net Operating Losses
• Loss Carrybacks and Carryovers
• Computing Net Operating Loss Deduction
• Farm Income and Expenses
• Other Income Items
• Passive Activity Loss (PAL) Rules
• Tests to Determine Material Participation
• At-Risk Rules
• Rental of a Home
• Qualified Business Income (QBI) Deduction

Learning Objectives

• Recognize how to complete Schedule C
• Determine eligibility for and report deductions on a range of business expenses
• Identify how to report deductions for travel-away-from-home costs
• Determine whether meal cost limitations apply
• Recognize how to calculate deductions for business vehicle use
• Explain how to figure the home office deduction
• Explain property depreciation, first-year expensing, bonus depreciation, and depreciation recapture
• Explain how to apply the rules for amortization, depletion, and different types of expensing
• Explain how to apply the limits on trade or business losses
• Determine net operating losses
• Determine whether a debt is a business or nonbusiness bad debt
• List special deductions for farming activities
• Explain how to apply the passive activity loss rules to businesses and rental activities
• Determine when losses from the rental of a home are deductible
• Explain how to figure the qualified business income deduction

Level
Intermediate

Instructional Method
Self-Study

NASBA Field of Study
Taxes (5 hours)

Program Prerequisites
1040 Preparation and Planning: Fundamentals or basic understanding of Form 1040.

Advance Preparation
None